London stocks are expected to open slightly lower on Wednesday, even after the US economy delivered far stronger growth than markets had anticipated.
With the Christmas break fast approaching, investors appear reluctant to make bold moves, leaving the FTSE 100 drifting rather than surging.
The mood in the City reflects a familiar end-of-year pattern: fewer traders at their desks, lighter volumes, and global headlines struggling to shift UK markets in a meaningful way.
Why is the FTSE 100 slipping this morning?
Futures pricing suggests the FTSE 100 will open around 4.7 points lower, putting the index near 9,884, down marginally from Tuesday’s close of 9,889.
The decline is modest, but notable given the strength of overnight data from the United States.
Market watchers say the weakness is less about bad news and more about timing. With Christmas just days away and the London Stock Exchange preparing for shortened hours, many institutional investors are choosing to sit tight rather than reposition portfolios.
How does the Christmas trading period affect UK markets?
Trading conditions in London are set to thin out sharply. The stock market will close early on Christmas Eve at 12:30pm, remain shut for Christmas Day and Boxing Day, and then reopen briefly before another early close on New Year’s Eve.
This stop-start schedule often dampens price movements. Even when global events are significant, they tend to have a softer impact on the FTSE 100 during the festive period, as fewer buyers and sellers are active.
What did the US GDP figures actually show?
The US Bureau of Economic Analysis reported that the American economy grew at an annualised rate of 4.3% in the third quarter, comfortably beating forecasts of 3.3%. Growth also accelerated from 3.8% in the previous quarter.
Every year, US GDP rose 2.3%, its strongest pace so far this year. According to the BEA, the expansion was driven mainly by higher consumer spending, stronger exports, and increased government outlays, partly offset by weaker investment.
“The increase in real GDP reflected strong household spending and exports, alongside higher government expenditure,” the BEA said in its statement.
While Wall Street welcomed the figures, UK investors are more cautious. Strong US growth can also mean US interest rates stay higher for longer, which tends to put pressure on global equities, including the FTSE 100.
How did global markets respond overnight?
US markets ended Tuesday firmly in positive territory, with the S&P 500 and Nasdaq both posting solid gains.
Asian markets, however, were mixed on Wednesday morning, reflecting uncertainty about how sustained US strength might affect global borrowing costs.
London’s more muted response highlights a growing gap between US optimism and the more restrained outlook seen in Europe, particularly as the UK economy continues to show slower growth.
What’s happening with the pound, oil, and gold?
Currency markets saw the US dollar weaken, helping push sterling up to around $1.35. A softer dollar often supports commodity prices, and that was evident again overnight.
Gold continued its rally, moving close to $4,495 an ounce, while Brent crude oil climbed above $62 a barrel.
Oil prices are being driven higher by rising geopolitical tensions involving Venezuela, a major oil producer, and growing diplomatic friction between the US, China, and Russia.
Are there any UK company updates today?
There are no scheduled UK corporate announcements, which adds to expectations of a subdued session for the FTSE 100.
Attention later in the day will turn to overseas data releases, including US jobless claims and crude oil inventory figures, though their influence on London trading is likely to be limited.
